AEGIS: The pace and magnitude of demand is more uncertain
“ConocoPhillips sees global demand returning to 100 million barrels per day and growing from there... . The view stands in contrast to that of rival BP Plc, which sees the coronavirus pandemic leaving a lasting effect on global energy demand.”
Reuters via OGJ, 9/25/2020
Source article (opens in new tab): ConocoPhillips Sees Global Oil Demand Returning, Executive Says
Article Summary
- ConocoPhillips leadership has stated global petroleum demand will rise back to 100 MMBBl/d (approximately the 2019 level) and beyond
- Contrarian points of view have asserted that peak oil demand may have been reached, and the damage done to oil demand from COVID-19 will last
- Other, bullish demand forecasts see a gradual return of gasoline and diesel demand, but jet fuel recovering substantially once a reliable vaccine is available and common
AEGIS View
The consensus view on global energy demand growth is material recovery by year-end 2021. Under this situation, the global supply-demand balance would tilt toward undersupply. The supply-side has been damaged due to a long stretch of low prices.
Therefore, the pace of demand growth is the key metric to watch, not the binary “yes/no demand will grow beyond 100 MMBbl/d.” AEGIS has favored (Oct 3, 2020) aggressive consumer hedging for refined products — especially jet fuel — while the product forward curves remain suppressed.
